Managing Money Market Accounts

Category : Managing Money

List all the requirements for your accounts, including minimum balance, number of transfers allowed per month, and time required for transfers to be completed.

Determine how much of a cushion you want to have in your checking account in order to feel comfortable that you will not bounce any checks. The higher the number, the more interest you will be giving up. The lower the number, the more chance you have to bounce a check. Generally, a round number like $500 or $1,000 is a good number.

On the day before your paycheck is deposited into your account, transfer all the money in your checking account above your cushion number.

For example, if your cushion is $500 and you have $983 on the day before you are paid, transfer $483 into your money market account.

Transfer money out of your money market to any account that goes below its cushion number. When you make the transfer, transfer the full amount of the cushion, not the amount necessary to bring it back to the number.

For example, if your cushion is $500 and your account balance drops to $485 then transfer $500, not $15. The reason is that you only get a few withdrawals from a money market account each month, so you need to be sure you will not need another transfer.

Avoid using checks, ATM withdrawals, or other means of taking money from your money market account to avoid using up your monthly allotment.